NASCAR Requests US Court To Dismiss Antitrust Suit By 23XI Racing And Front Row Motorsports
NASCAR Requests US Court To Dismiss Antitrust Suit By 23XI Racing And Front Row Motorsports
Pleads that the two teams be ordered to post a bond to cover the fees if they lose the case
The National Association for Stock Car Auto Racing (NASCAR) has requested the US District Court of the Western District of North Carolina to dismiss the antitrust suit filed by 23XI Racing and Front Row Motorsports. (FRM).
It further asked to dismiss chairman Jim France as a defendant in the suit filed by 23XI Racing, a team co-owned by NBA Hall of Famer Michael Jordan, and Front Row Motorsports, owned by entrepreneur Bob Jenkins.
Ending the 90-minute hearing, Judge Kenneth Bell indicated that the case deserved to be tried this year, and if not dismissed, the trial was set for December. Though promising a fast ruling, he ruled out dismissing the suit.
Meanwhile, Judge Bell had replaced Judge Frank Whitney after the latter heard the first round of arguments in November.
Recently, 23XI Racing and FRM requested Judge Whitney to be recognized as chartered teams, but the motion was denied.
The teams appealed and the case was transferred to Judge Bell, who overruled Whitney and granted an injunction allowing the teams to compete with charter recognition throughout the 2025 season.
It led NASCAR to request that the teams post a bond to cover all the payouts they receive as collateral, should the teams lose the case.
NASCAR and the teams that compete in the top Cup Series operate with a franchise system implemented in 2016. In this, 36 cars have ‘charters’ that guarantee them a spot in the field at every race and financial incentives. Every week, four ‘open’ spots are earmarked for the field.
For two years, the teams banded together in negotiations on an improved charter system in an often-contentious battle with NASCAR. In September, the Association presented the teams with a take-it-or-leave-it offer that had to be signed the same day - 48 hours before the start of the playoffs.
Of the 15 teams, 23XI and Front Row refused to sign the new charter agreement. They teamed to sue NASCAR and France. The two argued that as the only stock car entity in the US, NASCAR had a monopoly, and the teams were not getting their fair share.
While maintaining that they would still compete as open cars, both organizations convinced Judge Bell to give them chartered status, pleading that they would suffer irreparable harm as open cars.
Among the claims was that 23XI driver Tyler Reddick, last year's regular season champion, would contractually become an immediate free agent if the team did not have him in a guaranteed chartered car.
The judge displayed a better understanding of the case and peppered both sides with questions regarding payout structures, including what harm NASCAR would suffer if the teams were open cars.
At one point, he questioned, "Why give a charter to anyone?"
NASCAR’s attorney Christopher Yates of Latham & Watkins responded, "NASCAR would be perfectly fine going back to that (pre-charter) model."
Judge Bell admitted normally not hearing motions to dismiss but did so to get the case moving. He felt the hearing was beneficial, as he sized-up the attorneys and they could do the same.
Stating that he ‘despised’ discovery motions, he added that he would handle them. However, he warned both sides to work together to avoid disputes and promised that the losing side would pay the fees for the discovery portion of the case.
Meanwhile, suspense remains if he would order the teams to post a bond before the season begins next month.
NASCAR informed that it needed the money to be earmarked because it would be redistributed to the chartered teams if the two companies lost the case.
Jeffery Kessler, the prestigious antitrust lawyer argued that NASCAR had made no such promise to redistribute the funds to other teams. It was up to NASCAR's discretion how it would use the money and did not rule out spending some on its legal fees.
Jordan and Jenkins had attended the first hearing. However, this time, only 23XI co-owner Denny Hamlin was present, along with his fiancée and mother. France and vice chairman Mike Helton were in the gallery with NASCAR's in-house legal counsel and members of the communications team.
The court witnessed some comical moments due to the judge’s engagement. He challenged Yates enquiring about what NASCAR had to lose in the matter. Yates responded that NASCAR was focused on growing the sports and wanted to work with teams that did not denigrate the Association.
At this, the judge quipped, "You mean teams that don't sue NASCAR?"
When Kessler said that NASCAR was arguing one of its weakest points in the motion to dismiss, Judge Bell queried on the stronger points NASCAR should make.
Kessler reasoned, "I need to think about that."
Meanwhile, Yates shared that when the teams banded together to form the Race Team Alliance to fight as one entity for better terms, "the RTA acted as a cartel."
He said that Jordan partnered with Hamlin, a three-time Daytona 500 winner, to launch 23XI as a new investment after selling Charlotte Hornets. He added that though Jordan "thought the terms were bad, he bought it. He invested in NASCAR, though he could have invested in IndyCar or F1."
